We Wouldn't Be Too Quick To Buy Opal Balance Investments Ltd (TLV:OPAL) Before It Goes Ex-Dividend

Opal Balance Investments Ltd (TLV:OPAL) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase Opal Balance Investments' shares before the 20th of March to receive the dividend, which will be paid on the 30th of March.

The company's upcoming dividend is ₪0.0463646 a share, following on from the last 12 months, when the company distributed a total of ₪0.15 per share to shareholders. Looking at the last 12 months of distributions, Opal Balance Investments has a trailing yield of approximately 6.0% on its current stock price of ₪2.496. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Opal Balance Investments can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Opal Balance Investments

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Opal Balance Investments paid out more than half (57%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Opal Balance Investments paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Opal Balance Investments's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Opal Balance Investments dividends are largely the same as they were nine years ago.

Final Takeaway

Has Opal Balance Investments got what it takes to maintain its dividend payments? Opal Balance Investments's earnings per share have been essentially flat, and the company is paying out more than half of its earnings as dividends to shareholders. Opal Balance Investments doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Although, if you're still interested in Opal Balance Investments and want to know more, you'll find it very useful to know what risks this stock faces. Every company has risks, and we've spotted 3 warning signs for Opal Balance Investments (of which 1 is potentially serious!) you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.